The Health 202: Trump looks to Canada in bid to lower high drug prices

President Trump in the White House Cabinet Room on Monday. (Evan Vucci/AP)

President Trump spent 2019 struggling in his quest to lower drug prices. Now he’s trying to end the year with a bang by allowing cheaper drugs to be imported from Canada.

The Department of Health and Human Services announced this morning that it’s considering opening the door for sellers of drugs in the United States to import cheaper medications from our northern neighbor. But the regulations are nowhere near final, would apply to a limited set of drugs — and would require initiative from pharmacies, states, and drug wholesalers and manufacturers for them to have any effect at all.

“President Trump is fervently committed to lowering drug prices, is fervently committed to the importation of safe drugs from Canada,” Health and Human Services Secretary Alex Azar told reporters in advance of the announcement.

Drug importation was among a slew of ideas Trump put forth in his drug pricing blueprint in May 2018, as he vowed to be the first-ever president to seriously go after the pharmaceutical industry for prices that are many times those in other developed economies.

But today's announcement is only the second proposal the administration has been able to advance, amid internal disputes, technical and regulatory issues, and heavy pushback from the drug industry. The administration finalized a rule in June requiring drugmakers to list their prices in television ads, but that’s been blocked in court so far.

Secretary of Health and Human Services Alex Azar arrives at the White House in December. (Jabin Botsford/The Washington Post)

Here’s a big reason this task is so hard for Trump and other Republicans: They don’t want the U.S. government to directly force drugmakers to lower their prices.

Instead, they’re seeking to reduce U.S. drug prices indirectly by linking them to strict controls other governments impose on their own pharmaceutical industries. One way to do that is by tying what Medicare pays for drugs to lower average prices in other countries. The administration has written just such a regulation, but it’s currently stalled at the White House Office of Management and Budget.

Drug importation from Canada is another way to bring lower international prices into the United States. Drug prices are lower in Canada because a government review board sets a price ceiling for medications based on prices in seven other countries. Canada spent $772 on drugs per person in 2014, while the United States spent $1,112, according to the Organization for Economic Cooperation and Development.

It’s already the case that drugs manufactured in Canada frequently make their way into the United States. Individuals often purchase them online or during trips abroad, although health officials warn these medications aren’t necessarily safe because they’re not certified by the Food and Drug Administration.

But the drug importation regulation HHS is pursuing would make the prospect more enticing: States, pharmacies, drug wholesalers and other sellers of drugs could buy Canadian drugs at lower prices and bring them back to the United States to sell to patients directly. To do this, they could request permission to import a select number of drugs that are similar versions of FDA-approved drugs.

There’s a good chance states will pursue this route. But it's much less likely pharmaceutical makers will pursue a second pathway HHS says could reduce prices: Seeking FDA permission for importing cheaper versions of their own medications that they’re currently selling in Canada.

It’s unclear why pharmaceutical makers would be interested in doing such a thing. They enjoy the higher prices they’re allowed to charge in the United States. Back when Congress was considering drug importation in 2003, Pfizer, GlaxoSmithKline, AstraZeneca and Wyeth all sought to halt the flow of cheaper medicines into the United States.

Yet Azar insisted that drugmakers are interested in selling cheaper versions of their medications — something they’re often blocked from doing after getting locked into pricing agreements with pharmacy benefit managers.

“What drug companies have told us — and we’ll have to see if they live up to this — if they could get a new national drug code, they could issue that drug at a lower list price,” Azar said.

There’s also this factor: Canadian pharmacies aren’t exactly jazzed about the idea of sharing their drugs with the United States. There are widespread fears that if American wholesalers start buying drugs in Canada — a much smaller country — it could quickly lead to widespread shortages.

Azar has done quite the about-face on the whole importation question. Just look at a very different argument he made 15 years ago, while serving as general counsel for HHS under President George W. Bush.

In a 130-page report partially written by Azar, HHS concluded that allowing drug importation would put American consumers at risk, harm development of new cures and only reduce overall U.S. drug spending by 1 to 2 percent anyway.

Now Azar says drug importation would advance Trump’s priority of lowering drug costs in a significant way — while acknowledging past controversies over its effectiveness.

“There has been a long-standing debate over the role importation can play in a safe supply chain,” Azar said. “Supply chains in markets have changed over time. President Trump has been bold enough to recognize the opportunities we have on importation.”

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HEALTH ON THE HILL

(Astrid Riecken for The Washington Post)

— The Senate passed on a 86-to-8 vote the record-setting $738 billion defense bill that will extend 12 weeks of paid parental leave for federal workers, sending the measure to Trump’s desk.

The parental leave included in the measure achieves what Democratic lawmakers have long sought after, to guarantee leave for more than 2 million workers who don’t currently have paid coverage, our Washington Post colleagues Karoun Demirjian and Paul Sonne report.

“Trump cheered on the defense bill as it made its way through the House last week by a vote of 377 to 48. But the Senate’s vote this week is largely overshadowed by a concurrent last-minute dash to pass budget bills, and the House’s expected vote to impeach the president,” they add.

— Meanwhile, the House passed its massive $1.4 trillion spending package that repeals a trio of Obamacare taxes, raises the tobacco purchasing age to 21 and provides gun violence research funding for the first time since the 1990s.

The package “strip back parts of the Affordable Care Act, legislation that many Democrats believe serves as a defining moment of the Obama administration. The ACA taxes that were cut, however, were controversial and even many Democrats opposed them,” our Post colleagues Erica Werner and Mike DeBonis reports.

Democrats have cheered the $25 million in funding for federal gun violence research, the first such funding in more than 20 years.

GOP wins in the package “included funding to advance a Republican-supported Veterans Affairs program aimed at privatizing some VA health-care delivery, as well as the preservation of several policy restrictions related to abortion and gun rights,” our colleagues write. The package now moves for a vote in the Senate, which has to act on it before existing funding expires at the end of Friday.

— An analysis from the congressional Joint Committee on Taxation found that the removal of the three ACA taxes will cost the government $373.3 billion in taxes over 10 years.

“The bipartisan year-end spending deal includes repeal of the 40 percent tax on generous ‘Cadillac’ health insurance plans, the 2.3 percent medical device tax, and the Health Insurance Tax,” the Hill’s Peter Sullivan reports. “Those repeals cost $197 billion, $25.5 billion and $150.8 billion respectively, over 10 years, the committee estimated. The repeal of those taxes is a major win for the health insurance industry and the medical device industry, which had lobbied for years against them.”

AGENCY ALERT

— In a letter to HHS Secretary Azar, Democratic House and Senate committee leaders called for information about Centers for Medicare & Medicaid Services Administrator Seema Verma’s “lavish” use of taxpayer funds for private communication consultants.

The lawmakers noted they’d already requested information and documents related to the issue earlier this year.

“These contracts appear to be a highly problematic use of federal funds, and once again, call into question the Trump Administration’s commitment to transparency, ethics, and responsible stewardship of taxpayer dollars,” they wrote. “…To data, over eight months after we sent our letter, HHS has failed to fully respond to our requests for information and documents.”

TRUMP TEMPERATURE

— Trump intervened to cut Medicaid dollars meant for Puerto Rico as part of the government spending, Politico’s Rachana Pradhan reports.

Instead of allocating $12 billion over four years, the budget deal includes up to $5.7 billion over two years in Medicaid funds for the U.S. territory.

Over the weekend, Trump interceded because he believed the initial amount was too much.

“Puerto Rico's Medicaid program has been relying on a series of short-term funding extensions since the fall, after confronting a fiscal cliff on Sept. 30 when a temporary boost in money — one of several that Congress has enacted in recent years — was set to expire. Its latest pool of funding expires Friday,” she writes. “The territory’s funding negotiations to secure a longer-term agreement for its Medicaid program, which covers roughly 1.4 million low-income people, have been particularly fraught after it experienced massive political upheaval and struggled to recover from hurricanes.”

AHH, OOF and OUCH

Trump speaks during an event on kidney health at the Ronald Reagan Building and International Trade Center in Washington. (Evan Vucci/AP)

AHH: The Trump administration wants to make thousands more transplant organs available, proposing a new rule that could increase organ donation and transplantation to 42,000 a year, up from 36,000.

That effort is meant to be a “step toward reducing the huge waiting list for kidneys, livers, hearts and other organs. More than 114,000 people are on that list; many wait years for an organ. Thirty-three of them die each day,” our Post colleagues Kimberly Kindy and Lenny Bernstein report.

The administration is pledging to hold organ collection agencies to account, with new performance standards for the nation’s organ procurement organizations. “Dozens of them would be out of compliance and face possible closure if the new standards were in place today,” they write. “Current performance measures used to evaluate the nonprofits have been widely criticized because the groups assess themselves and can easily manipulate their organ recovery rates. Under the proposed rule, the number of potential donors and transplantable organs would be independently assessed.”

The rule also calls for boosting reimbursements for living donors for child-care and elder-care costs. “We don’t believe their financial situation should limit their generosity,” Azar said during a news conference.

The new HealthHUB is shown inside a CVS store in Spring, Tex. (David J. Phillip/AP)

OOF: The U.S. government has filed a lawsuit against CVS and its Omnicare subsidiary for allegedly fraudulently billing Medicare, Medicaid and other federal programs for hundreds of thousands of medications for people without proper prescriptions.

The suit accuses the company of dispensing the medications to patients in long-term care facilities, assisted-living centers and group homes. “Omnicare, and its parent company CVS, allowed Omnicare pharmacies to dispense prescription drugs indefinitely to individuals living in these residential facilities based on prescriptions that had expired, were out of authorized refills, or were otherwise invalid,” the complaint reads.

“Many of the drugs were anticonvulsants, antidepressants and antipsychotics and treated serious conditions such as dementia, depression and heart disease, and sometimes had dangerous side effects requiring supervision by doctors, the government said,” Reuters’s Jonathan Stempel reports.

“CVS, one of the largest U.S. drugstore chains and pharmacy benefit managers, said it did not believe the claims had merit, and that it intended to defend itself in court,” Jonathan adds. In a statement, CVS said it is “confident that Omnicare’s dispensing practices will be found to be consistent with state requirements and industry-accepted practices.”

OUCH: Purdue Pharma, the manufacturer of narcotic painkiller OxyContin that has been accused of fueling the opioid crisis, has quietly withdrawn from PhRMA, the trade group representing the country’s top drug companies, Stat’s Nicholas Florko reports.

The move is the “latest demonstration that the drug maker, which has filed for bankruptcy and is inundated by lawsuits across the country for its role in marketing OxyContin, is retreating from attempts to influence federal drug policy or restore its reputation,” he writes.

The split with the trade group occurred in October, and it may have been a result of the company not having the funds to maintain its membership.

“The company filed for bankruptcy in September and is expected to restructure into a public benefit trust, whereby the company’s profits would go directly to paying legal claims of those harmed by the opioid crisis,” Nicholas writes. “That novel structure would likely make it difficult for the company’s new management to fork over the millions of dollars in dues required each year to stay in PhRMA’s inner circle. PhRMA also requires its members to spend at least $200 million per year on research and development, and it’s unclear whether Purdue could afford that level of research under the new structure. Even so, the split caught drug industry lobbyists by surprise. Multiple outside lobbyists for PhRMA and PhRMA member companies told STAT they didn’t know Purdue had left the organization months ago.”

MEDICAL MISSIVES

Former vice president Joe Biden. (Keith Srakocic/AP)

— Former vice president Joe Biden is “healthy” and “vigorous,” and “fit to successfully execute the duties of the Presidency,” according to a summary of his medical history released by his doctor.

The 77-year-old Democratic presidential hopeful is the latest to release details from a physician, following glowing reports about rivals Sen. Elizabeth Warren (D-Mass.) and Mike Bloomberg.

“Biden, who has taken to challenging voters and reporters to push-up contests and wrestling matches to demonstrate his physical vigor, has faced persistent questions during the campaign about his age and his mental acuity, most prominently from President Trump,” our Post colleagues Matt Viser and Cleve R. Wootson Jr. report. The summary also indicates Biden doesn’t use tobacco products or drink alcohol.

The report did note that Biden is being treated for numerous conditions, including gastroesophageal reflux, seasonal allergies and an irregular heartbeat. “He is nearly 6 feet and weighs 178 pounds, with a blood pressure of 128/84. His cholesterol reading is 126, according to the latest records,” our colleagues add.

Sen. Bernie Sanders (I-Vt.) has also pledged to release his medical records by the end of the year.

At the start of his campaign, Buttigieg went on the record supporting sweeping policies that have become increasingly popular with the Democratic base. But in the last few months he has hit the campaign trail questioning hallmark progressive policies around education and health care.